Aktia Bank; Doing the right thing

Aktia Bank; Doing the right thing - Danske Bank (Oms)

Aktia today announced that it will go against the recommendation of the regulator and instead pay out 60% of the 2019 profits and propose a dividend for 2020 to the 2021 AGM in the normal fashion. We welcome what we believe is the right thing to do, as we believe regulators have been wrong in imposing the same capital distribution limitations on all banks regardless of whether they are strong or weak.

Paying a dividend.
Aktia today announced that its board has taken the decision to follow its mandate and pay out a EUR0.53 dividend for 2019 equal to a 60% payout ratio for 2019. It further states that the 13 April AGM will as normal make a decision on the 2020 dividend. As a result we have of course included the 2019 dividend in our model and we have also raised our payout for 2020 to 70% (company target is 60-80%) from our previous 14% which was in line with the proposed limitations from the regulator.

Reason for the move.
The board states that it has taken the recommendations of the regulator under careful consideration but decided to pay as it is a bank with solid capital adequacy and has been a trustworthy dividend distributor for a long time. The board goes on, making what we believe is a very important point, stating that it is important that Aktia remains an interesting investment object in the future.

An attractive yield.
The EUR0.53 dividend, to be paid on 20 January with a 13 January matching date, gives a 5.3% yield and our expected dividend for 2020 of EUR0.42 equals a 4.1% yield, both to be received during H1 21.

Positive in our view.
As we believe the regulator is wrong, we believe the board of Aktia is doing the right thing. We believe the message that the board does care about the shareholders of the bank is very valuable and something not often seen in banks. At 10.4x 2022E earnings, Aktia is trading at a premium to peers. We have historically argued that the larger exposure to the more profitable asset management segment justifies such a premium. Today we would also say that the premium is justified for Aktia being a truly shareholder friendly bank. We have made no changes to estimates apart from the dividend.

Aktia Bank; Doing the right thing - Danske Bank (Oms)

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